Cyber-Insurance Market Outlook Remains Stable Despite Softer Conditions

AM Best has reaffirmed a stable outlook for the global cyber-insurance market, citing continued strong demand and rising adoption, particularly among small and midsize enterprises. While market conditions have softened since 2023, the firm expects sustained profitability amid ongoing competition.

In its report, Market Segment Outlook: Global Cyber Insurance, AM Best highlighted increasing awareness of cyber risk as a key driver of market growth. Robert Gabriel, senior financial analyst at AM Best, said, "Fundamentally, the market's expansion is underpinned by increasing awareness of cyber risk and the need for risk transfer solutions to protect against the growing threat of cyber crime."

Mr. Gabriel said improved cyber hygiene among insureds has contributed to reducing losses by enabling more robust defenses and faster incident response.

Other contributors to the segment's stability include capital support from reinsurers and alternative capital providers, advancements in artificial intelligence for underwriting and risk selection, and evolving regulatory requirements that are prompting broader adoption of coverage.

Despite this stable outlook, AM Best continues to monitor systemic risks tied to large-scale cyber incidents. The interconnectivity of digital infrastructure presents the potential for widespread cascading losses across industries. In addition, the growing use of artificial intelligence has enabled more complex and large-scale cyber attacks. Challenges such as ransomware, business email compromise, and funds transfer fraud remain persistent and evolving.

AM Best will hold a briefing on July 23, 2025, at 11:00 a.m. (EDT) to explore trends in the cyber-insurance market and collaborative efforts between insurers and companies to limit losses.

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